Finding Solutions For Patients

At Lilly, we’re committed to finding solutions for the high out-of-pocket costs experienced by too many people in
need of our medicines.

In the United States, we’ve worked for years to keep out-of-pocket costs low by negotiating discounts with the
health plans and pharmacy-benefit managers (PBMs) that help Americans pay for prescription drugs.

Our discounts are now larger than ever. Lilly cut the average U.S. list price of our medicines by a full 50 percent
last year via rebates and discounts. That’s nearly twice as much as we did just five years ago—when the
average discount was 28 percent.

Because of these growing discounts, the average U.S. net price of Lilly medicines—the actual amount we recoup from
selling our products—rose 2.4 percent last year. That’s lower than overall medical inflation.

Information about Lilly’s list and net prices, and rebates and discounts, is now included in the2016 Lilly Integrated Summary Report, which we
released today. We hope this greater level of transparency makes it easier for patients, physicians, policymakers,
and others to understand our pricing and our efforts to help make our medicines affordable for everyone.

When we price our drugs, our goal is to price them consistent with the value they deliver to the health care
system. That could be longer, healthier lives for patients. It could be lower costs on hospital care. Ideally, it’s
both.

What’s confusing in health care is that the amount patients pay is mostly determined by insurance design, not by
manufacturers’ prices. Recently, more patients have been covered by high deductible plans. These plans often
require people to pay 100 percent of the list price of their medication—without the benefit of the rebate the drug
company pays—until patients hit their deductibles.

We don’t believe anybody with insurance should have to pay list prices—not for services, not for medications.

Even patients with more traditional insurance coverage pay more for drugs. Among all kinds of health plans,
patients shoulder about 5 percent of the total cost of hospital services, but nearly 20 percent of the total cost
of prescription drugs.

Fortunately, 90 percent of U.S. prescriptions are now low-cost generics, which started as brand-name drugs. Lilly
gets to sell the products we discover for a limited number of years—usually about 12—and then we face competition
from generic companies, which don’t spend money on research. This system makes low-cost generic medicine possible.

Here are some other examples of how we’re finding solutions for patients:

In the last few years, Lilly has signed five value-based contracts with three different health insurers. These contracts
require us to pay larger rebates if our drugs don't deliver significant value, but reduce our
rebates if our drugs produce better outcomes for patients or fewer expenses for health insurers.

On Jan. 1, Lilly launched a creative partnership with Blink Health and Express Scripts to deliver lower costs for our
diabetes medicines. Under this partnership, Lilly provides up to a 40 percent discount at the pharmacy
counter to any patients without insurance or to those with high-deductible health plans. This program
doesn’t solve all the challenges of high out-of-pockets costs that some patients face, but we believe it’s
a good first step.

The challenge now is for everyone in the health care community to work together to create even better solutions—to
make new breakthrough medicines available while also making them affordable for patients.